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PSALM to bundle land in sale of Malaya thermal-power plant

Source: 
Business Mirror

THE Power Sector Assets and Liabilities Management Corp. (PSALM) will engage the services of a third-party valuation firm to assess the site of the 650-megawatt (MW) Malaya Thermal Power Plant (MTPP).

PSALM President Irene Joy Garcia said the board decided to include the land in the privatization of the power facility. 'What we are planning to do with the privatization of Malaya is to include the land so it's going to be bundled together,' she said.

Located in Pililia, Rizal, the Malaya plant consists of a 300-MW unit with a once-through type boiler and a 350-MW unit fitted with a conventional boiler.

'We got a direction from the Department of Energy to look into the possibility because in the past, it's just the power plant. Now, we want to sell the power plant on 'as is, where is' basis and then we will include the land so that we can optimize the value of the power plant,' Garcia said.

Garcia said the Department of Finance (DOF), whose secretary is the PSALM chairman, suggested to tap a valuator.

'There is a policy direction from the DOF to also get the view of a third-party valuator so that we are not open to questions. It's also important we hire somebody whose expertise is to value assets. So while we have a department in PSALM that handles valuation, it is also good to get the input of a third-party valuator who can give us the fair market value at current price.'

PSALM is determined to sell the power plant within the year, possibly in November.

'Not later than the end of the year, but it's going to happen in the fourth quarter,' she said.

The MTPP will be privatized on as-is, where-is basis with the following considerations:

a. The limited capacity of MTPP may not adversely affect the demand-supply situation in 2019. Hence, MTPP is no longer required by the DOE to run as a must-run unit (MRU) for the next three years after its privatization.

b. PSALM will exert utmost effort to ensure that the remaining capability of operating units can be maximized when needed while the privatization process is ongoing.

The MTPP was earlier designated as an MRU by the DOE in 2014. As an MRU, it is compelled to run and provide the needed power supply as deemed necessary in order to ensure reliability of power supply in the Luzon grid, particularly in times of supply shortfall, system security and voltage support.

Now, Garcia said, 'the DOE gave its direction to allow the privatization without that requirement so there's no more three-year, must-run period.'

In the past, PSALM postponed the auction for the plant, which was supposed to be sold to four interested bidders who earlier submitted letters of interest. The four bidders are APT Global Inc., Phinma Energy Corp., Riverbend Consolidated Mining Corp. and AC Energy Holdings Inc.

The four bidders submitted letters of interest on December 20, 2016. The auction was supposed to take place in March 2017, but was put on hold pending the DOE's earlier recommendation to the PSALM Board. The DOE wanted to require the winning bidder to convert the power facility into a liquefied natural gas (LNG) plant.

'We have to conduct a new bidding. It's not a continuation of the earlier process. But to be fair to those who purchased bidding materials, we are actually going to credit them the amount they already paid for the bidding documents,' she said.

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